Economic Scan - Prince Edward Island - 2026
Demographics
Highlights
In 2025, 183,000 people lived in Prince Edward Island, an increase of 1.6% from 2024 to 2025. Prince Edward Island represents 0.4% of Canada's total population.
Average age of the non Indigenous population in Prince Edward Island is 42.8 versus 34.8 in the Indigenous population (Census 2021).- The proportion of seniors aged 65+ is projected to increase slightly from 21% in 2025 to 23% in 2035.
- In 2025, individuals aged 55 and older represented 39% of the working‑age population, a proportion expected to hold steady through 2035.
- The proportion of youths (15-24 years) is projected to slip from 16% in 2025 to 14% in 2035.
- Youth participation in the labour market continued to improve in 2025, with more Islanders aged 15–24 in the labour force and employed (+1.4%) compared to the previous year. However, the youth unemployment rate remains elevated (10.9%), reflecting challenging labour‑market conditions for young workers.
The Indigenous population comprises 2.2% of the Prince Edward Island population (2021 Census) and remains under-represented in the Island’s labour market. There are 1,730 Indigenous people in the labour force, and 1,495 of which are employed. The unemployment rate is notably higher amongst Indigenous people (13.9%) compared to the non-indigenous working-age population (10.3%).
In Prince Edward Island, approximately 96% of the population identified English as their first official language (2021 Census) or the language spoken most often at home, while 3% of the population spoke French most often at home. Just under 1% identified a first language that was neither English nor French. (2021 Census).
Recent immigrants (those arriving between 2016 and 2021) accounted for 41% of the Island's immigrant population in 2021. The pace of new arrivals has increased significantly in recent years, particularly as the province has relied on immigration to fill labour market gaps.
According to 2022 data on disability in Canada, the prevalence of disability (i.e. the disability rate) in P.E.I. was 31.8%, or 5.8 percentage points higher than at the time of the 2017 Canadian Survey on Disability. The disability rate rises with an ageing population base, which largely explains the increase in the province. P.E.I. experienced the lowest growth in disability rates among its Atlantic counterparts and compares to a 4.7 percentage point increase nationally.
Labour Market Conditions
In 2025...
Employment increased moderately (1.1%)
Unemployment rose (1.2%)
Participation Rate eased (66.5% to 66.0%)
Employment Rate fell (61.3% to 60.8%)
Province's Unemployment Rate
Show data table: Province's Unemployment Rate
| Year | Unemployment Rate (%) |
|---|---|
| 2016 | 10.8 |
| 2017 | 10.0 |
| 2018 | 9.9 |
| 2019 | 9.0 |
| 2020 | 10.6 |
| 2021 | 9.8 |
| 2022 | 7.7 |
| 2023 | 7.2 |
| 2024 | 8.0 |
| 2025 | 8.0 |
- The Island’s labour force and employment bases reached new all-time highs in 2025. Total employment rose by 1.1% to reach 93,500, marking the highest annual employment level ever recorded for the province, while the total labour force grew 1.2%, also a record high (at 101,600).
- The number of unemployed persons on the Island averaged 8,100 in 2025, representing a 2.5% increase over the previous year. Despite employment reaching record highs, the province’s annual unemployment rate held steady at 8.0%, unchanged from 2024 but still elevated relative to the Canadian average of 6.8%. Regardless, the Island’s unemployment rate remains well below its pre-pandemic norm of around 9.5%.
- P.E.I.’s participation rate in 2025 was 66%, indicating that about two-thirds of working-age Islanders were active in the labour market. Although marginally lower than in 2024, the Island’s participation rate was a percentage point higher than the national average.
Economic Conditions
Prince Edward Island's Economic Drivers in 2025
Rapid population growth
Exports
Capital Investments
Tourism
Show data table: GDP Growth Rate
| GDP growth rate (%) | |
|---|---|
| 2022 | 5.1% |
| 2023 | 2.9% |
| 2024 | 3.8% |
- Prince Edward Island’s population reached 182,657 as of July 1, 2025, growing 1.6% year‑over‑year-still expanding, though at a moderating pace, and ranking second in provincial growth behind Alberta. Demand remains supported by population increases, but federal caps on international students and shifting immigration policies are slowing overall inflows.
- The province’s 2025 Fall Capital Budget sets out a multi‑year plan to modernize essential infrastructure across Prince Edward Island, with major investments in healthcare, education, and community services. It also funds upgrades to roads, bridges, shoreline protection, and supports housing development and land‑use modernization.
- International demand for Island-made goods grew solidly in 2025, with P.E.I.’s goods exports reaching a record $2.68 billion-about 3% higher than the previous year. Most exports to the United States continue to qualify under CUSMA, leaving them largely unaffected by recently imposed U.S. tariffs.
- P.E.I.’s 2025–2026 Fiscal & Economic Update shows the economy remains resilient but is entering a period of moderated growth. Manufacturing, exports, construction, and tourism are supporting activity, while slowing population growth, weaker consumer sentiment, softer employment gains, and reduced tax revenues are tempering momentum.
Risks to the Prince Edward Island Economy in 2026
- Population growth has long been a key driver of P.E.I.’s economic expansion, but recent federal cuts to immigration targets and provincial measures to ease pressure on housing and healthcare are expected to slow new arrivals. This will mean fewer new consumers and labour‑force participants entering the province.
- Most P.E.I. exports to the United States continue to qualify under CUSMA, shielding them from many imposed U.S. tariffs. Overall export conditions remain relatively stable, but the possibility of future U.S. trade actions poses a significant ongoing risk for P.E.I.’s U.S. dependent economy. At the same time, escalating geopolitical tensions-particularly the Iran war - are adding an additional layer of macroeconomic uncertainty.
- The December 2025 Fiscal and Economic Update forecasts a significantly larger deficit of $367.4 million-nearly double the original 2025–26 projection-due to lower‑than‑expected revenues and sharply higher spending, particularly in health care, agricultural insurance (related to extreme weather), education, and social supports. With rising debt and reduced fiscal flexibility, the province may have less capacity to respond to external shocks such as tariff uncertainty or broader economic pressures.
Provincial Issues
- Labour shortages remain widespread across P.E.I., with persistently high health‑sector vacancies highlighting ongoing recruitment and retention challenges, while construction‑sector vacancies have eased somewhat as the industry rebalances. Overall job vacancies across many sectors remain elevated compared to pre‑pandemic levels.
- P.E.I.’s health‑care system continues to struggle with significant capacity pressures, reflected in intermittent rural ER closures, high turnover among younger nurses, and other challenges tied to workload, scheduling, and safety. Provincial and federal actions-including recruitment incentives, expanded credential recognition for internationally trained professionals, and targeted retention measures-are helping to bring new workers into the system
- Rental affordability on P.E.I. remains strained, especially for lower‑priced units where demand far exceeds supply, and even strong construction activity in Charlottetown and Summerside has not eased pressures, leaving many renters needing well above minimum wage to afford typical apartments. While the province continues to prioritize affordable and supportive housing, vacancy pressures persist because new supply has not fully kept pace with recent population growth.
Industry Trends
Show data table
| Industry (NAICS) | Employment Change ('000s) |
|---|---|
| Health care and social assistance | 1.5 |
| Manufacturing | 0.8 |
| Construction | 0.7 |
| Professional, scientific and technical services | 0.5 |
| Accommodation and food services | 0.4 |
| Wholesale and retail trade | 0.2 |
| Forestry, fishing, mining, quarrying... | 0.1 |
| Public administration | 0.1 |
| Business, building and other support services | 0.0 |
| Finance, insurance, real estate, rental... | 0.0 |
| Utilities | -0.1 |
| Educational services | -0.4 |
| Information, culture and recreation | -0.5 |
| Agriculture | -0.6 |
| Other services (except public administration) | -0.7 |
| Transportation and warehousing | -0.9 |
- P.E.I.’s construction sector remains a key economic driver, supported by record 2025 housing starts, strong residential activity, and improved financing conditions that have boosted homebuilding and renovation. BuildForce’s 2025–2034 outlook expects elevated residential construction through 2030, with non‑residential activity easing from recent highs and labour markets shifting toward more balanced conditions. Despite this momentum, more construction-especially purpose‑built rentals-is still needed to help restore affordability.
- P.E.I. experienced a record‑breaking 2025 tourism season, setting new highs in visitation, visitor spending, and paid overnight stays. in multiple regions within the province. Growth outside the summer peak also continued, with non‑peak visitation up 18% since 2019, supporting longer operating seasons and more year‑round employment. Strong sector indicators-including record food and beverage receipts, the best‑ever golf season, and peak museum and heritage site visitation-build on the previous record year in 2024.
- Manufacturing shipments reached record levels in 2025, with non‑durables up 4.4% and durables up 20%, while overall exports rose on the strength of pharmaceutical and aerospace goods. Seafood exports to China fell 20% in 2025 due largely to retaliatory tariffs, though these duties were lifted on March 1, 2026 following a new Canada–China trade deal. Despite generally stable export conditions, P.E.I. still faces significant uncertainty from potential future U.S. trade actions given its strong reliance on the American market.
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